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Continuous Flow Processing

System that mass produces a single homogenous output in a continuing process

operation costing

hybrid costing system often used in manufacturing goods that have some common characteristics plus some individual characteristics


standardized method or technique that is repetitively performed

job shop

firm that produces jobs

job cost sheet

record of the cost of the job kept in the accounting system

subsidiary ledger account

account that records financial transactions for a specific customer, vendor or job

control account

account in the general ledger that summarizes a set of subsidiary ledger accounts

normal cost

cost of job determined by actual direct material and labor cost plus overhead applied using a predetermined rate and an actual allocation base

actual cost

cost of job determined by actual direct material and labor cost plus overhead applied using an actual allocation base

standard cost

cost of job determined by standard (budgeted) direct material and labor cost plus overhead applied using a predetermined overhead rate and a standard (budgeted) allocation base


complex job that often takes months or years to complete and requires the work of many different departments, divisions, or subcontractors

value chain

set of activities that transforms raw resources into the goods and services that end users purchase and consume

value-added activities

Those activities that customers perceive as adding utility to the goods or services they purchase

supply chain

set of firms and individuals that sell goods and services to the firms

distribution chain

set of firms/individuals that buys and distributes goods and services from the firm

financial accounting

field of accounting that reports the financial position and income according to accounting rules

cost accounting

field of accounting that measures, records, and reports information about costs

non value added activities

activities that do not add value to the good or services from the customers perspective

cost-benefit analysis

Process of comparing benefits (often measured in savings or increased profits) with costs associated with a proposed change within an organization

differential costs

costs that change in response to a particular course of action

differential revenues

revenues that change in response to a particular course of action

responsibility center

specific unit of an organization assigned to a manager who is held accountable for its operations and resources


financial plan of the revenues and resources needed to carry out activities and meet financial goals

ABC Costing

costing method that first assigns costs to activities and then assigns them based on the products consumption of activities

Performance measure

metric that indicates how well an individual, business unit, product or firm is working


continual process of measuring a company's own products, services and activities again competitors performance

just in time method

in production or purchasing each unit is produced or purchased just in time for its use

lean accounting

a cost accounting system that provides measures at the work cell or process level and minimizes wasteful or unnecessary transaction processes

customer relationship management

system that allows firms to target profitable customers by assessing customer revenues and costs


having one or more of the firms activities performed by another firm/individual in the supply or distribution chain

total quality management

management method by which the organization seeks to excel on all dimensions with the customer ultimately defining quality

cost of quality

system that identifies the costs of producing low quality items, including rework, returns and lost sales

enterprise resource planning

information technology that links the various processes of the enterprise into a single comprehensive information system

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